Amid the turmoil that has been unfolding since last Thursday — with global markets losing billions — and the ongoing negotiations among countries trying to respond to U.S.-imposed tariffs and figure out how to strike a new balance under pressure from the White House, one clear adversary has now emerged: China.
But why China specifically, and only China?
The President of the United States has a natural inclination toward business, and while the way he attempts to shift global balances is often heavily criticized both domestically and internationally, it’s clear that he has his own methods… Donald Trump has made no secret of the fact that, in his view, there is no greater threat or rival today than Beijing — and his beloved numbers seem to prove him right. With Trump in the Oval Office for just over 60 days, Beijing now faces potential tariffs reaching up to 90% on all its exports to the U.S. This is undoubtedly setting a course that, before long, will openly challenge America’s global economic and investment dominance.
The red tsunami…
The Biden administration’s economic and trade representative, upon completing her term and returning to the U.S., described the commercial and economic landscape of recent decades in the darkest terms for her country. Katherine Tai specifically referred to the economic, technological, and investment forces emerging from Beijing as a “tsunami that no one will be able to resist.” Today, China — “ready for a long time now” — has the resources, the capacity, and seemingly the will to resist and go head-to-head with the U.S. on equal footing, as made clear in high-level statements.
China’s “strength in numbers”
China has decided to escalate its stance against Washington this time, simply because it now possesses a dynamic that no longer fits the “fragile” category — at least by its own estimation. The numbers showing China’s multi-level progress are truly impressive to an outsider — if such a thing still exists — and intimidating to those in power who feel threatened by the Chinese “dragon.”
Roughly five years ago, China experienced one of the most significant economic crises of this century. The housing “bubble” cost the country dearly, and the construction cranes that worked non-stop for two years building millions of homes across China have now disappeared. However, this did not lead to a withdrawal or inward turn for the Chinese banking system. In the past five years alone, Chinese banks — through a strategic shift in investment policy — have allocated nearly $2 trillion to further strengthen and develop the country’s industry. The results of these massive investments are already visible: China now has two new state-of-the-art vehicle production facilities, each of which annually produces twice as many cars as Volkswagen’s flagship factory in Germany.
At the same time, China has funneled a large portion of internal market capital into the petrochemical sector. With two new refineries, China now processes as much volume on its own as the combined total processed by equivalent refineries in the U.S. and Japan. In the field of technology, China is no longer lagging. Just a few kilometers from Shanghai, the world’s largest innovation research center has recently been established, employing over 35,000 researchers from various disciplines and covering an area ten times the size of Google’s U.S. headquarters.
China, which now produces at a pace unmatched and unstoppable by anyone else in the world, has managed to increase its exports even under tariff regimes — imposed not only by the Biden administration but also by Europe. Between 2023 and the end of 2024, exports rose from 13% to 17% of total production. While the U.S. may not be a direct market for Beijing, Europe remains one of its most dynamic destinations. At the same time, Beijing is rapidly developing a significant network of partners in Southeast Asia. Domestically, it’s opting for different types of production — of lower quality but equally high volume.
The internal threat that demands answers
For Beijing, American tariffs — which on vehicles exceed 180% — are not the biggest concern. The country’s top economists have been warning for years about internal dangers. With the average pension standing at just $17 a month and wages allowing the majority of Chinese people only to survive, the government now seems likely to start taking domestic issues seriously. Though small — and indeed minimal — the first increase of the minimum pension to $20 a month could signal a shift. There are rumors that the government may raise this amount to $110 by the end of the year. In a country where salary and pension increases have been virtually nonexistent for years, such a move is expected to stimulate both the internal economy and consumption.
